Is it likely that the company would still meet its objective to grow PBIT between 20X1 and 20X2?

A company aims to increase profit before interest and tax (PBIT) each year.

The company reports in A$ but has significant export sales priced in B$.

All other transactions are priced in A$.

In 20X1, the company reported:

In 20X2, the only changes expected are:

• An increase in export prices of 10%, but no change to units sold.

• A rise in the value of the B$ to A$/B$ 2.500 (that is, A$ 1 = B$ 2.5)

Is it likely that the company would still meet its objective to grow PBIT between 20X1 and 20X2?
A . Yes, PBIT would increase by A$ 48 million.
B . No, PBIT would fall by A$ 48 million.
C . Yes, PBIT would increase by A$ 150 million.
D . No, PBIT would fall by A$ 150 million.

View Answer

Answer: B